Global Issues Final

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The total number of goods and services produced in a given year + any foreign income - any interest or debt payments

Gross National Income

The total goods and services produced in a given year

Gross Domestic Product

What are the issues of measuring GDP and GNP?

1. They fail to distinguish ampong types of economic activity

2. Many goods and services generate costs that are not reflected in their prices

3. Many nuturing and creative activities are not included because they are not bought and sold

the estimated number of dollars required to purchase comparitable goods in different countries

Purchasing Power Parity

Explain the GINI index.

A society that scores 0.0 on the Gini scale has perfect equality in income distribution. Higher the number over 0 higher the inequality, and the score of 1.0 (or 100) indicates total inequality where only one person corners all the income.

Explain the difference between the market and the coordinated economy.

Government holds stronger ownership of vital industries in coordinated market which keeps it more stable.

What are some characteristics of American public policy?

High educational spending

Low support for working families

Private, rather than public, services

Tax breaks, not income support

Low taxation

What are the three factors of production? and what is defined as "capital?

Land

Labor

Capital (anything that aids in the production of labor)

What does comparitive advantage tell us?

Every country has a comparitive advantage in something

Every country can gain by specializing in what it does competitively well and trade for what it does less well

What does the Stolper-Samnelson Theorem tell us?

In an economy open to trade: The price of a country's abundant factor will rise

The price of a country's scarce factor will fall

What do trade policy preferences say about winners and losers of trade?

Losers from trade want less trade and higher tariffs

Winners from trade want more trade and lower tariffs

How does European quality merchandise compare to that of American-made merchandise?

better fine-tuning high quality

better at niche products

compete on quality, not price

How do Americans compare to Europeans as far as manufacturing products?

better at rapid innovation

better at mass production

compete on price, not quality

How does America distinct itself from taxation, social spending, and inequality of income among its citizens?

we tax less than Europe

we spend less on education and socially

inequality is higher

Which countries have a comparitive advantage in capital and human labor?